Why the Philippines Need More Industrial Parks

by | May 6, 2019 | Blog |

Fairly recently, China is considering building an industrial park in the Philippines to promote the local manufacturing sector and create more jobs once bilateral ties improve.

“In the ASEAN, we have already built eight industrial parks but we haven’t built any in the Philippines yet,” said Chinese Ambassador to the Philippines Zhao Jianhua in his speech during an investment forum.

Industrial parks are an important development tool adopted by many industrialized countries. The growth sustained by the technology used in the industrial park opens opportunities for creating new jobs, improving local productivity and maintaining a competitive environment in the respective country. Hence, the Philippines can benefit immensely if it has more industrial parks.  Here are some reasons why the Philippines need more industrial parks:

  1. Scale

Units located in an industrial estate can adopt centralized buying and selling. The requirement of all the members for raw materials and components can be pooled together and bulk purchases made. Such bulk purchases would be eligible for quantity discounts resulting in lower costs. In the Philippines where every peso counts, lower costs are a big deal in business.

  1. Agglomeration

Agglomeration refers to the benefit of reduced production costs because of concentration of industries. The benefits from agglomeration include availability of skilled labor, availability of components, presence of financial institutions, as well as repair, maintenance, and service facilities.

  1. Inter-relatedness

The finished product of one unit might be the raw material for another unit. Since the units are located close by, it may results in savings in transportation cost for the purchaser, an assured market, and reduced selling cost for the seller, which again is very beneficial for Filipino businesses looking for more savings.

  1. Access to Infrastructure

The infrastructural facilities such as electricity, water, roads, telecom etc., are readily available in industrial estates. The Philippines has more to develop in terms of infrastructure, so access to pertinent facilities is very important. Through this, production can commence immediately without any wastage of time and resources.

  1. Access to Support Facilities

Apart from the basic infrastructure, banks, post offices etc., are located in industrial estates. This facilitates business transactions to a greater extent.

  1. Development of Backward Areas and Employment Opportunities

Industrial estates provide employment. Since many of the units are labor intensive, there are opportunities for both skilled and unskilled workers. With their development, a host of facilities come up such as banks, post offices, insurance companies, housing, schools, and health care facilities. This results in growth in backward areas and balanced regional development.